ID card chip makers Infineon, Philips, Samsung fined by EU Commission

Wondering why only selected few semiconductor vendors dominating the security id chip market? The leading companies in this market must be having best technologies, but there is also another factor. Well, European commission finds a group of ID card semiconductor vendors co-ordinated their market behaviour, kind of a cartel.

The companies found by European Commission includes leading industrial and power semiconductor maker Infineon, Philips (which has divested its semiconductor business into another company named NXP Semiconductors), world's 2nd ranked semiconductor vendor Samsung and world's top microcontroller chip vendor Renesas. The EU said these companies coordinated their market behaviour for smart card chips in the European Economic Area (EEA), in breach of EU rules that prohibit cartels. The total fine imposed on these companies is € 138 048 000.

The release from EU Commission says "The companies colluded through bilateral contacts that took place in the period between September 2003 and September 2005." However Renesas is saved from fining for revealing the existence of the cartel to the Commission.

"In this digital era smart card chips are used by almost everybody, whether in their mobile phones, bank cards or passports. It is crucial that the companies producing them focus their efforts on how to outperform their competitors by innovating and providing the best products at the most attractive prices. If instead companies choose to collude, at the expense of both customers and end consumers, they should expect sanctions" said Joaquín Almunia, Commission Vice President in charge of competition policy.

"The companies involved in the cartel colluded through a network of bilateral contacts in order to determine their respective responses to customers' requests to lower prices. They discussed and exchanged sensitive commercial information on pricing, customers, contract negotiations, production capacity or capacity utilisation and their future market conduct. Collusion of this type breaches Article 101 of the Treaty on the Functioning of the European Union (TFEU) and Article 53 of the Agreement on the European Economic Area (EEA), which prohibit cartels and restrictive business practices." , stated in the release.

The Commission said it had initially explored the possibility of settling this case with some of the companies involved under the Commission's 2008 Settlement Notice. However, in 2012 the Commission decided to discontinue the settlement discussions and to revert to the normal procedure because of the clear lack of progress of these discussions.

Security ID IC chips are used in SIMs, smart cards, id cards, passports, e-tickets, and many such id storing devices, which are basically low power consuming tiny sized very thin microcontroller IC chips. The market for these chips is huge and is estimated to be growing at double digit.

To read the full release from EU Commission visit
http://europa.eu/rapid/press-release_IP-14-960_en.htm